Agricultural Production Diversity and Market Participation Can Absorb the Impact of Shocks on Household Food Security

Abstract

Bangladesh is highly exposed to recurrent covariate and idiosyncratic shocks that pose persistent threats to household food security. This study examines whether agricultural production diversity and market participation can mitigate the adverse effects of such shocks on food security. Using nationally representative data from the Household Income and Expenditure Survey (HIES) 2022 and applying Partial Least Squares Path Modeling (PLS-PM), the analysis captures both direct and mediated pathways linking shocks, livelihood responses, and food insecurity. Descriptive results show that floods and waterlogging are the most prevalent covariate shocks, while illness, job loss, and income reductions constitute the dominant idiosyncratic shocks. Food insecurity remains widespread, with only 43% of households food secure and 24% experiencing severe food insecurity. Structural path estimates indicate that covariate shocks significantly worsen household food security, while simultaneously inducing greater agricultural production diversification and increased market participation. Agricultural production diversity strongly promotes market participation and independently reduces food insecurity, while market participation also exerts a direct food-security-enhancing effect. Mediation analysis reveals that diversification and market participation partially absorb the negative impacts of covariate and combined shocks on food security; however, these strategies are insufficient to fully offset the overall adverse effects of shocks. Idiosyncratic shocks show limited and statistically insignificant mediated effects. Overall, the findings highlight that while agricultural diversification and market participation enhance household resilience, covariate shocks remain the primary drivers of food insecurity in Bangladesh. Strengthening diversified production systems alongside efficient and inclusive market access is therefore critical for reducing food insecurity in shock-prone contexts.